Why rural and regional banks are disappearing


Published on

Four months ago, Councillor Charlie Sheahan, the mayor of Gundagai, in NSW, made an emotional plea to NAB. He asked it to reconsider the decision to close the bank's Gundagai branch.

Not only was NAB the last of the Big Four to withdraw from the area, it held a special place among the locals as it had been serving them since 1880, when it first opened the branch from the same heritage building in the town's main street.

The branch - at 201 Sheridan Street - once bustled with the footsteps of goldminers, livestock producers and passing trade from city folk. Now the building is an empty echo of the past after Sheahan's appeal fell on deaf ears.

gundagai nab bank branch closure

Country towns abandoned by banks

That sense of abandonment is being felt in many regional towns around Australia.

Latest figures show that the number of bank branches in regional and remote areas has fallen by at least 29% in the five years to June 2022. Closures would be even higher if it weren't for a moratorium this year after a public outcry.

As Sheahan stated in his letter to the government expressing his disappointment about a lack of community consultation, why couldn't the bank reverse the decision as another
Big Bank did in the nearby town of Junee after a similar appeal?

Not that banks are entirely to blame.

The rise of digital banking

Digital banking has surpassed all expectations to become the go-to channel for more than 90% of banking customers.

In Gundagai, NAB said almost half of their customers came to the branch only once in the past year.

It comes down to the social dilemma of servicing a dwindling and arguably insignificant base of 4.5% of the population that can't do their banking without a branch.

Older people, low-income earners most affected

Research shows that as we move heavily towards contactless payments, two groups suffer the most when a branch closes: the poor and the elderly.

They are the sacrificial lambs as we move towards purely digital banking platforms.

"Bank closures have a negative impact on older people, especially those who are less inclined to bank online. For people who live in regional areas, travelling to another branch may not be feasible," said Ian Henschke, chief advocate for National Seniors Australia.

This is not a new problem. The Hawker Inquiry in the 1990s looked into the impact of regional bank closures and there is another inquiry ongoing this year with the report due by June 2024 (the report was originally scheduled to be released next month).

Reversing the trend

A year since the final report of the Regional Banking Taskforce was released, the recommendations there still ring true as the best ways to lift the financial burden on the marginalised, including:
• Opening up more Smart ATMs around the country.
• Promoting the banking services from Bank@Post (even if Australia Post's branch network is also under threat).
• Doing more community consultation to understand how the locals and the bank can work together.

Separately, National Seniors Australia suggests the government considers giving Australia Post a banking licence, if that could at least make up for the loss of bank branches in remote areas.

Bucking the trend is Bendigo Bank, which opened a branch in Gerringong and an office in Bombala, both in NSW, last year. Bendigo is supporting these small  towns with agri loans, home loans and, where needed, mobile bankers who go to their customers when travelling to a Bendigo Bank branch is difficult.

An additional argument for branch openings, they are a way for vulnerable customers to avoid online scams.

It may not be the most profitable move to keep a branch open, but it is a purposeful one, driving the cadence of economic growth in remote communities.

Get stories like this in our newsletters.

Related Stories


Michelle Baltazar is editor-in-chief of Money magazine and an award-winning journalist, editor and publisher. She has worked at media companies including BRW, Shares Magazine (London) and industry newspaper Financial Standard, and has written about superannuation, wealth management, investment technology and financial advice.
Bryan Macpherson
November 11, 2023 8.17am

These banks, which donated millions to the referendum campaign, now deprive those same communities of banking facilities - on the basis of cost effectiveness. The wasted donations would have been better spent supporting local branches and the rural communities they serve.

James Sherlock
November 11, 2023 8.45am

I live on the Mornington Peninsula, and I'll be the first to admit I love online banking and rarely go to a branch, but when I do the trek to find one is frustrating. Of a bigger concern to me is the withdrawal of bank ATM's and their replacement by fee for service units.

I rarely use cash if I can avoid it, but if I sell or buy something on marketplace etc. the lack of a facility to handle cash is challenging.

New limits by supermarket on withdrawals, and a 'home in the wall' post office with queues for miles are exacerbating the situation.